TEHRAN: An Iranian Central Bank official has said that Iran has banned processing of purchase orders for imports based on US dollar.
Iran’s economic and financial difficulties and the lingering impact of sanctions continue to impact the value of its currency and trade relations.
Speaking in Tehran on Wednesday March 1, the CBI director of foreign exchange policy and regulations Mehdi Kasraipour said the ban on dollar-based purchase orders would be effective immediately.Although Kasraipour has mentioned the sanctions as the underlying cause of Iran’s new decision, this could be part of the Iranian government’s initiatives to control the black market for foreign currency and to prevent the rising price of US dollar against the Iranian currency tuman, which has been fast losing its value over the past nine months.
It is still not known whether the ban on dollar-based purchase orders would make any difference in controlling the devaluation of the Iranian currency if merchants begin to pay for imports in Euros, the most likely alternative to dollars.
The CBI decision appears to be oblivious to the fact that the Iranian currency has been losing its value against all major currencies, not just against the US dollar.
Based on figures released by the Iranian Trade Development Organization, Iran has imported almost $43 billion worth of goods during the past ten months. The figures show a 22 percent rise in imports compared to the same period in the previous year.
Iran receives its oil revenue in Euros although the price of oil is determined in US dollars.
Replacing dollars with Euros may not create any problem in Iran’s trade with Europe. But during the past ten months only 10 percent of Iran’s imports have come from Europe.
Iran’s major trade partners are in East Asia and usually trade in dollars and their national currencies are not popular in the world markets.
